May 15 (Bloomberg) -- Sharp Corp. forecast its first annual
profit in three years as Japan’s largest maker of liquid-crystal
displays expects orders to recover after signing a deal with
Samsung Electronics Co.

Net income may be 5 billion yen ($49 million) in the year
started April 1, compared with a loss of 545 billion yen a year
earlier, the Osaka-based company said in a statement yesterday.
The projection beat the 2.1 billion-yen average of 13 analyst
estimates compiled by Bloomberg.

Japan’s third-largest maker of televisions expects its LCD
unit to make money this year after cutting jobs and selling
stakes to Samsung and Qualcomm Inc. Sharp, which lost 921.4
billion yen the past two years, turned its biggest display plant
into a venture with Taiwanese billionaire Terry Gou to boost
sales through his Foxconn Technology Group, the world’s biggest
contract manufacturer of electronics.

“The Foxconn venture and the tie-up with Samsung are
bringing in more display orders,” Kota Ezawa, an analyst at
Citigroup Inc. in Tokyo, said before the announcement. The
weakening yen is “also positive,” he said.

Sharp fell for the first time in eight days, dropping 6
percent to 499 yen at 9:17 a.m. in Tokyo trading and paring its
gain this year to 65 percent. The shares plunged 55 percent in
2012.

Loans Agreement

Sharp also released its midterm plan targeting net income
of 80 billion yen and operating margin of 5 percent on 3
trillion yen in sales for the year to March 2016. The
electronics maker will strengthen ties with large customers for
LCDs, focus on big-screen TVs and shrink its overseas solar
business during the next three years to boost earnings, it said.

The company said it has an “informal agreement” with
lenders Mizuho Financial Group Inc. and Mitsubishi UFJ Financial
Group Inc. to continue 360 billion yen of loans due June 30.
Sharp will get a 150 billion-yen loan from lenders to redeem
convertible bonds, Tetsuo Onishi, Sharp’s senior executive
managing officer in charge of accounting, said yesterday.

Operating profit, or sales minus the cost of goods sold and
administrative expenses, will be 80 billion yen this fiscal
year, while revenue is expected to rise to 2.7 trillion yen, the
company said yesterday.

Samsung Deal

Sharp also will promote Executive Vice President Kozo
Takahashi to replace Takashi Okuda as president. Okuda will
become chairman, succeeding Mikio Katayama, pending shareholder
approval at the June 25 annual meeting.

“We have caused troubles to our shareholders and other
stakeholders,” Takahashi said in Tokyo yesterday. “We are
deeply sorry. My mission is to put all my efforts into
recovery.”

LCDs will remain Sharp’s core business, Takahashi said. The
unit will probably turn an operating profit of 30 billion yen
this fiscal year after losing 139 billion yen in the year ended
March. Sharp plans to boost LCD sales to more than 1 trillion
yen by March 2016, he said.

“It’s hard to foresee,” said Yasuo Nakane, an analyst at
Deutsche Bank Group. “Sharp’s LCD operation faces variables
such as orders from Apple and Samsung and prices.”

The Japanese company raised 10.4 billion yen in March by
selling shares to Samsung, Asia’s biggest electronics maker. The
investment will secure a supply of LCDs from Sharp, Samsung said
March 6. Samsung accounted for about 1.7 percent of Sharp’s
sales last year, according to data compiled by Bloomberg.

Sharp, which also makes smartphones and tablet computers,
joined Sony Corp. and Panasonic Corp. in projecting improved
earnings this fiscal year after cutting jobs and selling assets.

Sony, Panasonic

Sony said last week net income may rise 16 percent this
fiscal year as the company expects to sell more TVs and
smartphones. Panasonic projected annual net income of 50 billion
yen, its first profit in three years.

Japan’s three biggest TV makers are benefiting from a
weakening yen that’s boosting the repatriated value of overseas
earnings even as they lose market share to South Korean rivals.

Sharp’s share of revenue in the global flat-panel TV market
dropped to 5.4 percent last year from 6.6 percent in 2011,
according to researcher DisplaySearch. Suwon, South Korea-based
Samsung boosted its share to 27.7 percent.

Sharp expects TV sales this year of 8 million, compared
with 8.03 million a year earlier.

In July, Sharp sold a stake in its largest LCD plant to
Gou. Output at the plant, which dropped to 30 percent of
capacity before the deal, has recovered, Onishi said yesterday.

The 100-year-old company, which supplies screens for Apple
Inc.’s iPad and iPhone 5, is mulling ways to boost capital as
Onishi said it targets a return to the debt capital market.
Sharp’s equity ratio slid to 6 percent as of March 31, from 23.9
percent a year earlier, the company said yesterday.

In December, Sharp agreed with San Diego-based Qualcomm,
the biggest maker of mobile-phone chips, on a 9.9 billion-yen
share sale in two steps.